Greece is likely to face slower growth in the coming years as external pressures intensify. Geopolitical tensions in the Middle East are weighing on consumer spending, while financial support from European Union funds is gradually fading, according to the latest European Economic Outlook by EY (Ernst & Young).
Even so, the Greek economy remained resilient in 2025. Gross domestic product increased by 2.5% in the fourth quarter, bringing full-year growth to 2.1%. Private consumption, investment, and exports all supported the expansion, signaling a gradual shift toward a more balanced growth model. At the same time, higher employment and rising incomes supported household spending and reflected continued labor market normalization.
Inflation remains above target as Greece faces slower growth
Inflation remained above target in 2025 and was relatively stable throughout the year. It averaged 2.5%, moving within a range of 1.9% to 3.1%.
Services and food drove most of the price pressure, while lower energy costs helped contain broader inflation. In February 2026, inflation rose to 2.7% year over year, as higher food and hospitality prices outweighed the dampening effect of cheaper energy.
Investment to anchor growth in 2026
Looking ahead, EY expects Greece’s GDP growth to hold steady at 2.1% in 2026, keeping the country above the Eurozone average. Investment is set to remain the main driver of expansion, supported by ongoing projects funded through NextGenerationEU.
However, private consumption is expected to soften as the conflict in the Middle East adds to price pressures. An investment-led growth pattern will likely boost imports, limiting the contribution of net exports even if exports remain stable.
EU fund slowdown to test momentum
From 2027 onward, Greece’s growth is expected to normalize gradually as investment momentum weakens with the completion of NextGenerationEU programs.
Still, the country’s improving fiscal position should create room for targeted measures to cushion energy costs for households and businesses, support domestic demand, and co-finance new investment projects. As a result, those measures could offset part of the slowdown in EU-funded activity.
Greece’s slower growth trajectory may include temporary uptick in inflation
Inflation is projected to reach about 3.0% in 2026, driven largely by higher energy prices linked to geopolitical tensions. While core inflation is expected to ease, persistent pressures in the services sector will likely keep it above 2%.
Beyond that, a pullback in energy price shocks should bring inflation down to around 2% in 2027—though only briefly. By 2028, inflation is forecast to rise again, mainly due to increased energy costs associated with the rollout of the European Union’s Emissions Trading System 2 (ETS2).